Today’s Student Loan Repayment Programs

Student-Loans (1)You will be assigned a loan repayment program when you start paying back your student loan. However, you can change the repayment program anytime you want and choose one that suits you best anytime you want. If you are not comfortable with the repayment program that you are currently on, you should call your loan servicer and talk about the possibly of changing your repayment plan. There are several student loan repayment programs. They include;

The standard repayment program

You are eligible for this program if you got subsidized or unsubsidized loans, plus loans or unsubsidized or subsidized Federal-Stafford Loans. You will be required to pay a fixed amount that is not less than $50 monthly. The loan repayment period may be up to 10 years. Under this program you will pay less amount of interest with time than you would if you used other plans.

Extended repayment program

You are eligible for this repayment program if you were given direct unsubsidized and direct subsidized loans, unsubsidized and subsidized Federal-Stafford loans or plus loans. Payments in this program may be graduated or fixed. The repayment period can be up to 25 years. When you use this student loan repayment program, your monthly payments will be less that those of a 10 years standard repayment program.

Graduated repayment program

You are eligible for this repayment program if you were given direct unsubsidized and direct subsidized loans, unsubsidized and subsidized Federal-Stafford loans or plus loans. Payments are usually low at first but increase after every two years. The repayment period is up to 10 years. When you use this repayment program, you will end up paying more than the amount you would pay if you used a 10 years standard program.

Income based repayment program

You are eligible for this repayment program if you were given direct unsubsidized and direct subsidized loans, unsubsidized and subsidized Federal-Stafford loans or plus loans. You are also eligible if you were given consolidated loans that do not include plus loans made to parents. Your maximum payment per month will be 15% of your discretionary income. The monthly payments will change as your income changes. The repayment period may be up to 25 years. However, to be considered for this program, you must be experiencing partial financial hardship. When you use this repayment program, your monthly payments will be lower than in the 10 year standard repayment plan and you will pay more money over time. If you have not repaid the full amount after 25 years of servicing the loan, any outstanding balance will be forgiven. However, you may have to pay income tax on the forgiven amount.

Pay-as-you-earn repayment program

You are eligible for this repayment program if you were given direct unsubsidized and direct subsidized loans, unsubsidized and subsidized Federal-Stafford loans or plus loans. You are also eligible if you were given consolidated loans that do not include plus loans made to parents. Maximum payment per month will be 10% of discretionary income. Your monthly payments will change as your income changes. To use this program, you must also be experiencing partial financial hardship and must have borrowed the loan after 1, October, 2007.

Income contingent repayment program

You are eligible for this program if you got subsidized or unsubsidized loans plus loans, direct plus loans and direct consolidation loans. Payments are adjusted every year based on your gross income, size of your family and the total amount you have in direct loans. Repayment period is up to 25 years. If you have not repaid the full amount after 25 years of servicing the loan, any outstanding balance will be forgiven.

Income sensitive repayment program

You are eligible if you took unsubsidized and subsidized Federal-Stafford loans, FFEL PLUS Loans or FFEL Consolidation Loans. Monthly payments are based on the amount of money you earn annually. Payments change with income. The repayment period is up to 10 years.

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